Cost-Demand Tug-of-War Keeps ADC12 Under Pressure in the Short Term [SMM Cast Aluminum Alloy Morning Comment]

3.27 SMM Morning Comment on Cast Aluminum Alloy

Futures: Overnight, the most-traded cast aluminum alloy ad2605 contract closed at 22,940 yuan/mt, up 180 yuan/mt from the previous trading day's close, or 0.79%. The three lines diverged upward, and the J value approached overbought territory, indicating strong short-term bullish momentum. Multiple small bullish candlesticks/doji suggested that bulls were gradually gaining strength, but the contract had yet to break through the key resistance level of 23,025. Prices rose on lower volume and reduced open interest, so caution is warranted against a possible pullback caused by insufficient follow-up trading volume.

Spot-futures price spread daily: According to SMM data, on March 26, the theoretical spot premium of SMM ADC12 spot prices over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2605) was 1,535 yuan/mt.

Warrant daily: SHFE data showed that on March 26, the total registered volume of cast aluminum alloy warrants was 39,035 mt, down 1,390 mt from the previous trading day. Of this, total registered volume in Shanghai was 2,424 mt, down 211 mt from the previous trading day; Guangdong 16,200 mt, down 486 mt; Jiangsu 3,398 mt, down 210 mt; Zhejiang 12,142 mt, down 423 mt; Chongqing 3,634 mt, down 30 mt; and Sichuan 1,237 mt, down 30 mt.

Aluminum scrap: On Thursday, spot primary aluminum fell 250 yuan/mt from the previous trading day, and the aluminum scrap market generally followed lower. Amid current wild swings in aluminum prices, aluminum scrap yards showed a stronger willingness to hold back cargoes, highlighting the resilience of aluminum scrap prices. As for the price difference between A00 aluminum and aluminum scrap, on March 26, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,693 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 1,403 yuan/mt. The aluminum scrap market is expected to maintain its high-level consolidation pace next week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) hovering at 19,800-20,500 yuan/mt (excluding tax). In the short term, close attention still needs to be paid to the impact of geopolitical conflicts on fluctuations in primary aluminum prices, the actual recovery of terminal orders, and the actual implementation progress of supply-side policies, with vigilance against risks of sharp price swings.

Silicon metal: Over the past week, the most-traded silicon metal contract continued to hold up well, closing at 8,735 yuan/mt late on Thursday. Spot transaction prices were largely stable, with SMM east China oxygen-blown #553 silicon at 9,100-9,300 yuan/mt. On the quotation side, most silicon enterprises kept shipment offers stable, while the price center of quotes from trading firms engaging in both spot and futures market moved higher. Silicon enterprise quotes were relatively low, and the market mostly traded at lower prices.

Markets outside China: In markets outside China, current overseas ADC12 quotes remained in the range of $3,220-3,260/mt, while immediate import losses stayed at around 2,000 yuan, leaving the theoretical import window closed.

Summary: In the spot market, the ADC12 market yesterday remained in the doldrums, with mainstream enterprises generally lowering quotes by 100-200 yuan/mt. Demand remained weak, with insufficient order follow-up, and downstream procurement was mainly driven by rigid demand, while wait-and-see sentiment was strong. Meanwhile, affected by poor orders, enterprises faced greater shipment pressure, low-priced cargoes gradually increased, market competition intensified, and the price center moved lower passively. Overall, against the backdrop of no clear improvement in demand, ADC12 prices will remain under pressure, with weak fluctuations likely to dominate in the short term.

[Data Source Statement: Except for public information, all other data is processed and derived by SMM based on public information, market communication, and SMM's internal database models, and is for reference only and does not constitute decision-making advice.]